Question 1

In liability fraud, liabilities are most often

Accepted Answer

A)  Understated 
B)  Overstated 
C)  Recorded as assets 
D)  Recorded as expenses 
A)  Understated 
B)  Overstated 
C)  Recorded as assets 
D)  Recorded as expenses

Question 2

What type of disclosure fraud is perpetrated when a company fails to disclose significant events that occur after the balance sheet date (i.e. subsequent events)?

Accepted Answer

A)  Misrepresentation of the company or its products 
B)  Misrepresentation in financial reports 
C)  Misleading footnotes 
D)  None of the above 
A)  Misrepresentation of the company or its products 
B)  Misrepresentation in financial reports 
C)  Misleading footnotes 
D)  None of the above

Question 3

All of the following are examples of disclosure fraud except:

Accepted Answer

A)  Failing to disclose contractual obligations 
B)  Failing to disclose information regarding loans to creditors 
C)  Inadequately disclosing significant accounting policies 
D)  Inadequately disclosing information about pensions 
E)  All of the above are examples of disclosure fraud 
A)  Failing to disclose contractual obligations 
B)  Failing to disclose information regarding loans to creditors 
C)  Inadequately disclosing significant accounting policies 
D)  Inadequately disclosing information about pensions 
E)  All of the above are examples of disclosure fraud

Question 4

All of the following are analytical symptoms for unrecorded liabilities except

Accepted Answer

A)  The amount of interest expense doesn't coincide with the debt recorded 
B)  Significant decreases in recorded debt 
C)  Significant purchases of assets with no recorded debt 
D)  Unearned revenues that appear too low 
E)  All of the above are analytical symptoms for unrecorded liabilities 
A)  The amount of interest expense doesn't coincide with the debt recorded 
B)  Significant decreases in recorded debt 
C)  Significant purchases of assets with no recorded debt 
D)  Unearned revenues that appear too low 
E)  All of the above are analytical symptoms for unrecorded liabilities

Question 5

"Cookie jars" refer to which of the following types of accounts?

Accepted Answer

A)  Travel expenses 
B)  Personal expenses 
C)  Reserves 
D)  Intangible assets 
E)  None of the above 
A)  Travel expenses 
B)  Personal expenses 
C)  Reserves 
D)  Intangible assets 
E)  None of the above

Question 6

Which of the following is not a method used to overstate assets?

Accepted Answer

A)  Inflate assets in mergers, acquisitions, and restructurings 
B)  Record newly acquired assets at cost instead of fair market value in a healthy economy 
C)  Capitalize an asset that should be expensed 
D)  Overstating cash and marketable securities 
A)  Inflate assets in mergers, acquisitions, and restructurings 
B)  Record newly acquired assets at cost instead of fair market value in a healthy economy 
C)  Capitalize an asset that should be expensed 
D)  Overstating cash and marketable securities

Question 7

The following are all Inventory/Cost of Goods Sold fraud symptoms except:

Accepted Answer

A)  Inventory and/or cost of goods sold documents are missing 
B)  Reported "purchases" appear too high relative to inventory levels 
C)  New or unusual vendors do not go through the regular-approval process 
D)  Reported "purchase returns" appear too high or are increasing too rapidly 
A)  Inventory and/or cost of goods sold documents are missing 
B)  Reported "purchases" appear too high relative to inventory levels 
C)  New or unusual vendors do not go through the regular-approval process 
D)  Reported "purchase returns" appear too high or are increasing too rapidly

Question 8

Which of the following is an example of asset overstatement fraud?

Accepted Answer

A)  Not recording contingent liabilities 
B)  Under recording debt 
C)  Under recording depreciation expenses 
D)  Improperly expensing costs that should be capitalized 
E)  None of the above 
A)  Not recording contingent liabilities 
B)  Under recording debt 
C)  Under recording depreciation expenses 
D)  Improperly expensing costs that should be capitalized 
E)  None of the above

Question 9

Which of the following is NOT a method for understating liabilities?

Accepted Answer

A)  Record unearned revenues as earned revenues 
B)  Recording payments in later periods, when they are actually paid 
C)  Borrow against equities in assets 
D)  Write off liabilities 
A)  Record unearned revenues as earned revenues 
B)  Recording payments in later periods, when they are actually paid 
C)  Borrow against equities in assets 
D)  Write off liabilities

Question 10

All of the following are ways to detect disclosure fraud except:

Accepted Answer

A)  A tip or a complaint 
B)  Making inquiries of management regarding related-party transactions, and other liabilities 
C)  Identifying inconsistencies between disclosures and information in the financials 
D)  Searching for analytical symptoms in the financial statements 
A)  A tip or a complaint 
B)  Making inquiries of management regarding related-party transactions, and other liabilities 
C)  Identifying inconsistencies between disclosures and information in the financials 
D)  Searching for analytical symptoms in the financial statements

Question 11

In the past, companies have committed fraud through mergers and acquisitions by:

Accepted Answer

A)  Using market values instead of book values 
B)  Improperly allocating book values to assets 
C)  Having the wrong entity act as the purchaser 
D)  All of the above 
A)  Using market values instead of book values 
B)  Improperly allocating book values to assets 
C)  Having the wrong entity act as the purchaser 
D)  All of the above

Question 12

Inadequate disclosure occurs when

Accepted Answer

A)  Companies falsify the financial statements 
B)  A press release falsely claims new products will be released next week 
C)  A company recalls products without notifying investors first 
D)  A company overstates liabilities 
A)  Companies falsify the financial statements 
B)  A press release falsely claims new products will be released next week 
C)  A company recalls products without notifying investors first 
D)  A company overstates liabilities

Question 13

Companies use all but which of the following to finance their operation?

Accepted Answer

A)  Earnings 
B)  Dividends 
C)  Debt 
D)  Owner investments 
A)  Earnings 
B)  Dividends 
C)  Debt 
D)  Owner investments

Question 14

A form 1099 with no withholdings where withholdings should exist may be a fraud symptom for which liability account?

Accepted Answer

A)  Accounts Payable 
B)  Unearned Revenues 
C)  Contingent Liabilities 
D)  Accrued Liabilities 
A)  Accounts Payable 
B)  Unearned Revenues 
C)  Contingent Liabilities 
D)  Accrued Liabilities

Question 15

What is the best way to find under-recorded contingent liabilities?

Accepted Answer

A)  Examine debt ratio 
B)  Examine current ratio 
C)  Look for documentary symptoms 
D)  Look for lifestyle symptoms 
A)  Examine debt ratio 
B)  Examine current ratio 
C)  Look for documentary symptoms 
D)  Look for lifestyle symptoms

Question 16

Which of the following factors does not make frauds more difficult to detect?

Accepted Answer

A)  Collusion with outsiders 
B)  Forgery, which GAAS auditors are not trained to detect 
C)  Off-book frauds in which no records on the company's books are fraudulent 
D)  None of the above 
A)  Collusion with outsiders 
B)  Forgery, which GAAS auditors are not trained to detect 
C)  Off-book frauds in which no records on the company's books are fraudulent 
D)  None of the above

Question 17

Documentary symptoms that relate to all types of liability fraud include all of the following except:

Accepted Answer

A)  Denied access to records, facilities, or people from whom audit evidence might be obtained 
B)  Photocopied purchase-related records where originals should exist 
C)  Transactions not recorded in a complete and timely manner 
D)  Unexplained items on reconciliations 
E)  All of the above are documentary symptoms 
A)  Denied access to records, facilities, or people from whom audit evidence might be obtained 
B)  Photocopied purchase-related records where originals should exist 
C)  Transactions not recorded in a complete and timely manner 
D)  Unexplained items on reconciliations 
E)  All of the above are documentary symptoms

Question 18

Which of the following is a symptom of Accounts Payable fraud?

Accepted Answer

A)  Discrepancies in cut-off tests 
B)  Discussion of Contingent liabilities in Board Minutes 
C)  Liens on properties that are supposed to be paid for 
D)  None of the above 
A)  Discrepancies in cut-off tests 
B)  Discussion of Contingent liabilities in Board Minutes 
C)  Liens on properties that are supposed to be paid for 
D)  None of the above

Question 19

Which of the following is usually the hardest fraud to detect?

Accepted Answer

A)  Liability fraud. 
B)  Revenue fraud. 
C)  Asset fraud. 
D)  Disclosure fraud. 
A)  Liability fraud. 
B)  Revenue fraud. 
C)  Asset fraud. 
D)  Disclosure fraud.

Question 20

Which of the following is usually not helpful for determining the existence of a merger fraud?

Accepted Answer

A)  Understanding the context of the merger. 
B)  Observing analytical symptoms. 
C)  Determining if the merger was done in accordance with GAAP. 
D)  Comparing after-merger book values with corresponding pre-merger book values 
E)  None of the above 
A)  Understanding the context of the merger. 
B)  Observing analytical symptoms. 
C)  Determining if the merger was done in accordance with GAAP. 
D)  Comparing after-merger book values with corresponding pre-merger book values 
E)  None of the above

In liability fraud, liabilities are most often

What type of disclosure fraud is perpetrated when a company fails to disclose significant events that occur after the balance sheet date (i.e. subsequent events)?

All of the following are examples of disclosure fraud except:

All of the following are analytical symptoms for unrecorded liabilities except

"Cookie jars" refer to which of the following types of accounts?

Which of the following is not a method used to overstate assets?

The following are all Inventory/Cost of Goods Sold fraud symptoms except:

Which of the following is an example of asset overstatement fraud?

Which of the following is NOT a method for understating liabilities?

All of the following are ways to detect disclosure fraud except:

In the past, companies have committed fraud through mergers and acquisitions by:

Inadequate disclosure occurs when

Companies use all but which of the following to finance their operation?

A form 1099 with no withholdings where withholdings should exist may be a fraud symptom for which liability account?

What is the best way to find under-recorded contingent liabilities?

Which of the following factors does not make frauds more difficult to detect?

Documentary symptoms that relate to all types of liability fraud include all of the following except:

Which of the following is a symptom of Accounts Payable fraud?

Which of the following is usually the hardest fraud to detect?

Which of the following is usually not helpful for determining the existence of a merger fraud?

The Nature of Fraud

Why People Commit Fraud

Fighting Fraud: An Overview

Preventing Fraud

Recognizing the Symptoms of Fraud

Data-Driven Fraud Detection

Investigating Theft Acts

Investigating Concealment

Conversion Investigation Methods

Inquiry Methods and Fraud Reports

Financial Statement Fraud

Revenue- and Inventory-Related Financial Statement Frauds

Fraud Against Organizations

Consumer Fraud

Bankruptcy, Divorce, and Tax Fraud

Fraud in E-Commerce

Legal Follow-Up

Filters

Exam 13: Liability, Asset, and Inadequate Disclosure Frauds

In liability fraud, liabilities are most often

What type of disclosure fraud is perpetrated when a company fails to disclose significant events that occur after the balance sheet date (i.e. subsequent events)?

All of the following are examples of disclosure fraud except:

All of the following are analytical symptoms for unrecorded liabilities except

"Cookie jars" refer to which of the following types of accounts?

Which of the following is not a method used to overstate assets?

The following are all Inventory/Cost of Goods Sold fraud symptoms except:

Which of the following is an example of asset overstatement fraud?

Which of the following is NOT a method for understating liabilities?

All of the following are ways to detect disclosure fraud except:

In the past, companies have committed fraud through mergers and acquisitions by:

Inadequate disclosure occurs when

Companies use all but which of the following to finance their operation?

A form 1099 with no withholdings where withholdings should exist may be a fraud symptom for which liability account?

What is the best way to find under-recorded contingent liabilities?

Which of the following factors does not make frauds more difficult to detect?

Documentary symptoms that relate to all types of liability fraud include all of the following except:

Which of the following is a symptom of Accounts Payable fraud?

Which of the following is usually the hardest fraud to detect?

Which of the following is usually not helpful for determining the existence of a merger fraud?

The Nature of Fraud

Why People Commit Fraud

Fighting Fraud: An Overview

Preventing Fraud

Recognizing the Symptoms of Fraud

Data-Driven Fraud Detection

Investigating Theft Acts

Investigating Concealment

Conversion Investigation Methods

Inquiry Methods and Fraud Reports

Financial Statement Fraud

Revenue- and Inventory-Related Financial Statement Frauds

Fraud Against Organizations

Consumer Fraud

Bankruptcy, Divorce, and Tax Fraud

Fraud in E-Commerce

Legal Follow-Up

Filters